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8-K - FORM 8-K - QUALYS, INC.d281123d8k.htm

Exhibit 99.1

 

LOGO

QUALYS ANNOUNCES FOURTH QUARTER AND FULL YEAR 2016 FINANCIAL RESULTS

2016 Revenue Growth of 20% Year-Over-Year; Q4 Growth of 18% Year-Over-Year

2016 GAAP EPS of $0.50; Q4 of $0.15

2016 Non-GAAP EPS of $0.86; Q4 of $0.23

REDWOOD CITY, Calif., – February 8, 2017 Qualys, Inc. (NASDAQ: QLYS), a pioneer and leading provider of cloud-based security and compliance solutions, today announced financial results for the fourth quarter and full year ended December 31, 2016. For the quarter, the Company reported revenues of $52.2 million, GAAP net income of $5.9 million, non-GAAP net income of $8.8 million, Adjusted EBITDA of $18.5 million, GAAP earnings per diluted share of $0.15 and non-GAAP earnings per diluted share of $0.23. For the full year ended December 31, 2016, the Company reported revenues of $197.9 million, GAAP net income of $19.2 million, non-GAAP net income of $32.8 million, Adjusted EBITDA of $68.0 million, GAAP earnings per diluted share of $0.50 and non-GAAP earnings per diluted share of $0.86.

“Fourth quarter 2016 was a solid finish to our strong fiscal year during which we increased revenues by 20%, maintained industry-leading margins, and deployed 2 million paid Cloud Agents. Throughout 2016, we continued to expand our cloud platform capabilities with new offerings and strategic partnerships that make us more strategic to customers, positioning Qualys for continued profitable growth,” said Philippe Courtot, chairman and CEO, Qualys, Inc. “The security industry is seeing a rapid transformation from legacy point products to integrated and automated capabilities that seamlessly work together as a platform. As a pioneer and innovator in this shift, customers worldwide are turning to the Qualys Cloud Platform to enable their digital transformation; this was most recently reflected in an IDC report, which showed that Qualys has taken the #1 market-share position over IBM and HP in the $1.6 billion WorldWide Vulnerability Assessment Market with 70% of Forbes Global 50 and 68% of Fortune 50 now standardized on Qualys.”

Fourth Quarter 2016 Financial Highlights

Revenues: Revenues for the fourth quarter of 2016 increased by 18% to $52.2 million compared to $44.4 million for the same quarter in 2015.

Gross Profit: GAAP gross profit for the fourth quarter of 2016 increased by 14% to $40.5 million compared to $35.4 million for the same quarter in 2015. GAAP gross margin percentage was 78% for the fourth quarter of 2016 compared to 80% in the prior year’s fourth quarter. Non-GAAP gross profit increased by 15% to $41.1 million compared to $35.7 million in the same quarter in 2015. Non-GAAP gross margin percentage was 79% for the fourth quarter of 2016 compared to 80% in the fourth quarter of 2015.

Operating Income: GAAP operating income for the fourth quarter of 2016 was $8.8 million compared to $7.7 million in the same quarter in 2015. Non-GAAP operating income for the fourth quarter of 2016 was $13.8 million compared to $12.5 million in the same quarter in 2015.

Net Income: GAAP net income for the fourth quarter of 2016 was $5.9 million, or $0.15 per diluted share, compared to $5.4 million, or $0.14 per diluted share, for the same quarter in 2015. Non-GAAP net income for the fourth quarter of 2016 was $8.8 million, or $0.23 per diluted share, compared to non-GAAP net income of $7.8 million, or $0.21 per diluted share, for the same quarter in 2015.


Adjusted EBITDA: Adjusted EBITDA (a non-GAAP financial measure) for the fourth quarter of 2016 increased by 12% to $18.5 million compared to $16.4 million for the same quarter in 2015. As a percentage of revenues, Adjusted EBITDA was 35% for the fourth quarter of 2016 compared to 37% for the fourth quarter of 2015.

Fourth Quarter 2016 Business Highlights

 

    FedRAMP Authority to Operate. Qualys Cloud Platform was granted an Authority to Operate (ATO) by the U.S. Department of Health and Human Services under the Federal Risk and Authorization Management Program (FedRAMP).

 

    Partnership with Deutsche Telekom. Announced a new partnership with Deutsche Telekom to add the Qualys Private Cloud Platform to its portfolio of Telekom Security Managed Services.

 

    Ranked No.1 market leader in Worldwide Vulnerability Assessment Market by a leading industry analyst firm IDC, surpassing all competing security vendors.

 

    Analysts & Investors Day. Qualys’ Executive Team discussed the company’s vision, strategy, product roadmap and investment highlights as well as showcased forthcoming, ground-breaking new services.

New Customers in Fourth Quarter 2016

 

    Agrium, Allen & Overy, Capital One, COUNTRY Financial, Cushman & Wakefield, Delta Air Lines, FMR LLC (Fidelity Management and Research), Juniper Networks, Lockheed Martin Corporation, Micron Technology.

Full Year 2016 Financial Highlights

Revenues: Revenues for 2016 increased by 20% to $197.9 million compared to $164.3 million for 2015.

Gross Profit: GAAP gross profit for 2016 increased by 19% to $155.5 million compared to $130.4 million for 2015. GAAP gross margin percentage was 79% for 2016 compared to 79% for 2015. Non-GAAP gross profit increased by 19% to $157.3 million for 2016 compared to $131.6 million for 2015. Non-GAAP gross margin percentage was 79% for 2016 compared to 80% for 2015.

Operating Income: GAAP operating income for 2016 was $30.1 million compared to $24.8 million for 2015. Non-GAAP operating income for 2016 was $51.0 million compared to $42.3 million for 2015.

Net Income: GAAP net income for 2016 was $19.2 million, or $0.50 per diluted share, compared to $15.9 million, or $0.42 per diluted share, for 2015. Non-GAAP net income for 2016 was $32.8 million, or $0.86 per diluted share, compared to non-GAAP net income of $26.7 million, or $0.70 per diluted share, for 2015.

Adjusted EBITDA: Adjusted EBITDA (a non-GAAP financial measure) for 2016 increased by 20% to $68.0 million compared to $56.7 million for 2015. As a percentage of revenues, Adjusted EBITDA was 34% for 2016 compared to 34% for 2015.

Full Year 2016 Business and Product Highlights

 

    Released Qualys ThreatPROTECT as an extension to Qualys Vulnerability Management to assist customers with prioritizing vulnerabilities based on level of threat as measured by multiple threat indicators.

 

    Sold 2 million Cloud Agents providing customers with real-time visibility across on-premise devices, cloud applications and endpoints.

 

    Released Qualys Security Assessment Questionnaire (SAQ) 2.0 allowing organizations to better consolidate and orchestrate assessments of third-party business processes and vendor risk by centrally capturing all relevant information from technical and human sources, drastically reducing associated time and cost.


    Unveiled midmarket Private Cloud Platform Appliance (PCP-A). The new form-factor extends the Qualys Private Cloud Platform to medium-sized companies needing to retain data on-premise or within local geographies previously not served by Qualys.

 

    Achieved FedRAMP Compliance for Qualys Cloud Platform, allowing federal agencies previously not served by Qualys a path to quickly adopt the Qualys Cloud Platform and integrated suite of offerings for continuous security and compliance.

 

    Expanded Qualys Consultant suite with new packages and flexible pricing options, enabling consultants to simplify client engagements, increase productivity and reduce cost.

 

    Expanded Qualys Cloud Platform to support Microsoft Azure with a new Azure-certified virtual scanner appliance allowing organizations to assess the security and compliance posture of their Azure virtual machines from the Qualys console.

 

    Announced Global Strategic Partnerships with Deutsche Telekom, HP Enterprise, NTT Security US and Wipro that will integrate the Qualys Cloud Platform as part of their managed services to enable customers for better visibility of IT assets across hybrid public and private clouds.

New Customers in 2016

 

    Avery Dennison, Blue Cross and Blue Shield of Massachusetts, Computershare, Cox Automotive, CSC (Computer Sciences Corp), Dominos Pizza Enterprises, First Citizens Bancshares, First Data NJ, Fortinet, HCL Technologies LTD, HP Inc, Huawei Technologies Co., Informatica, Library of Congress, MTN Group, Nationstar Mortgage, Nissan Motors Limited, Nordea Bank Norge, Republic Airways Holdings, Reynolds America, Roche Holdings AG, South Carolina Dept of Employment, The Valspar Corporation, WageWorks, and Wake Forest Baptist Medical.

Financial Performance Outlook

First Quarter 2017 Guidance: Management expects revenues to be in the range of $52.0 million to $53.0 million, 12% to 15% growth over first quarter 2016 or estimated 16% to 18% growth normalized for the impact of FX and the MSSP (Managed Security Service Provider) contract. GAAP net income per diluted share is expected to be in the range of $0.38 to $0.41, which assumes an effective income tax rate of (145%). Non-GAAP net income per diluted share is expected to be in the range of $0.17 to $0.19, which assumes an effective non-GAAP income tax rate of 36%. First quarter 2017 EPS estimates are based on approximately 39.3 million weighted average diluted shares outstanding for the quarter.

Full Year 2017 Guidance: Management expects revenues to be in the range of $224 million to $228 million, 13% to 15% growth over the full year 2016 or estimated 16% to 18% growth normalized for the impact of FX and the MSSP contract. GAAP net income per diluted share is expected to be in the range of $1.00 to $1.06, which assumes an effective income tax rate of (30%). Non-GAAP net income per diluted share is expected to be in the range of $0.81 to $0.86, which assumes an effective non-GAAP income tax rate of 36%. Full year 2017 EPS estimates are based on approximately 39.6 million weighted average diluted shares outstanding.

Investor Conference Call

Qualys will host a conference call and live webcast to discuss its fourth quarter and full year 2016 financial results at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on Wednesday, February 8, 2017. To access the conference call, dial (877) 881-2609 in the U.S. or +1 (970) 315-0463 for international participants with conference ID # 50052119. The live webcast of Qualys’ earnings conference call can also be accessed at http://investor.qualys.com/events.cfm. A replay of the conference call will be available through the same webcast link following the end of the call.

About Qualys, Inc.

Qualys, Inc. (NASDAQ: QLYS) is a pioneer and leading provider of cloud-based security and compliance solutions with over 9,300 customers, excluding security consulting firms, in more than 100 countries, including a majority of each of the Forbes Global 100 and Fortune 100. The Qualys Cloud Platform and integrated suite of solutions help organizations simplify security operations and lower the cost of compliance by delivering critical security intelligence on demand and automating the full spectrum of auditing, compliance and protection for IT systems and web


applications. Founded in 1999, Qualys has established strategic partnerships with leading managed service providers and consulting organizations including Accenture, BT, Cognizant Technology Solutions, Deutsche Telekom, Fujitsu, HCL Technologies, HPE, Infosys, NTT, Optiv, SecureWorks, Tata Communications, Verizon and Wipro. The company is also a founding member of the Cloud Security Alliance (CSA). For more information, please visit www.qualys.com.

Qualys, the Qualys logo and QualysGuard are proprietary trademarks of Qualys, Inc. All other products or names may be trademarks of their respective companies.

Legal Notice Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally relate to future events or our future financial or operating performance. Forward-looking statements in this press release include, but are not limited to, statements related to: the growth of our business, including renewals and market share gains, adoption of our existing solutions and our new offerings to both existing and new customers; the capabilities of our platform; the expansion of our certifications and partnerships and the related benefits of such certifications and partnerships; our strategy and our business model, the scalability of our strategy, and ability to execute such strategy; our guidance for revenues, GAAP EPS and non-GAAP EPS for the first quarter and full year 2017, and our expectations for the number of weighted average diluted shares outstanding and effective income tax rate for the first quarter and full year 2017. Our expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include our ability to continue to develop platform capabilities and solutions; the ability of our platform and solutions to perform as intended; customer acceptance and purchase of our existing solutions and new solutions; real or perceived defects, errors or vulnerabilities in our products or services; our ability to retain existing customers and generate new customers; the budgeting cycles, seasonal buying patterns and length of our sales cycle; our ability to manage costs as we increase our customer base and the number of our platform solutions; the market for cloud solutions for IT security and compliance not increasing at the rate we expect; competition from other products and services; fluctuations in currency exchange rates, unexpected fluctuations in our effective tax rate on a GAAP and non-GAAP basis, our ability to effectively manage our rapid growth and our ability to anticipate future market needs and opportunities; any unanticipated accounting charges; and general market, political, economic and business conditions in the United States as well as globally. The forward-looking statements contained in this press release are also subject to other risks and uncertainties, including those more fully described in our filings with the Securities and Exchange Commission, including our Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, filed with the Securities and Exchange Commission on November 4, 2016. The forward-looking statements in this press release are based on information available to Qualys as of the date hereof, and Qualys disclaims any obligation to update any forward-looking statements, except as required by law.

Non-GAAP Financial Measures

In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Qualys monitors operating measures of non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, and non-GAAP net income per diluted share. In computing these non-GAAP financial measures, Qualys excludes the effects of stock-based compensation expense and non-recurring expenses. Qualys also monitors Adjusted EBITDA (defined as earnings before interest, taxes, depreciation, amortization, stock-based compensation, other (income) expense, net and non-recurring expenses) and free cash flow (defined as cash provided by operating activities less purchases of property and equipment, and capitalized software development costs). Estimated impact of the MSSP contract signed in Feb 2016 refers to the difference between the estimated revenue recognized under the new terms in the MSSP contract and the estimated revenue that would have been recognized without the MSSP contract, assuming an appropriate renewal rate. The percentage impact is the net benefit, only in the contract year in which it occurred. Qualys believes that these non-GAAP operating metrics help illustrate underlying trends in its business that could otherwise be masked by the effect of the income or expenses, as well as the related tax effects, that are excluded in non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP net income per diluted share and Adjusted EBITDA.


Furthermore, Qualys uses these operating measures to establish budgets and operational goals for managing its business and evaluating its performance. Qualys monitors free cash flow as a liquidity measure to provide useful information to management and investors about the amount of cash generated by the Company that, after the acquisition of property and equipment and capitalized software development costs, can be used for strategic opportunities, including investing in its business, making strategic acquisitions and strengthening the balance sheet. Qualys also believes that non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP net income per diluted share, Adjusted EBITDA and free cash flow provide additional tools for investors to use in comparing its recurring core business operating results over multiple periods with other companies in its industry. Non-GAAP net income per diluted share for the twelve months ended December 31, 2016 excludes approximately $0.7 million of non-recurring expenses related to the remittance of payroll taxes from year 2013 through May 2016. During this same period, the Company has not excluded amounts related to other non-recurring items from non-GAAP net income per diluted share because the Company has considered such amounts to be immaterial in any given quarter during such period.

We have not reconciled non-GAAP net income per diluted share guidance to GAAP net income per diluted share because we do not provide guidance on the various reconciling cash and non-cash items between GAAP net income and non-GAAP net income (i.e., stock-based compensation and non-recurring expenses). The actual dollar amount of reconciling items in the first quarter and full year 2017 is likely to have a significant impact on the Company’s GAAP net income per diluted share in the first quarter and full year 2017, respectively. Accordingly, a reconciliation of the non-GAAP net income per diluted share guidance to the corresponding GAAP net income per diluted share is not available without unreasonable effort.

In order to provide a more complete picture of recurring core operating business results, the Company’s non-GAAP net income and non-GAAP net income per diluted share include tax adjustments required to achieve the effective tax rate on a non-GAAP basis, which could differ from the GAAP effective tax rate. The Company believes the non-GAAP effective tax rate, which is 36% in 2017, is a reasonable estimate under its global operating structure. The Company intends to re-evaluate the non-GAAP effective tax rate on an annual basis. However, it may adjust this rate during the year to take into account events or trends that it believes materially impact the estimated annual rate. The non-GAAP effective tax rate could be subject to change for a number of reasons, including but not limited to, significant changes resulting from tax legislation, material changes in geographic mix of revenues and expenses and other significant events.

The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of the non-GAAP financial measures discussed in this press release to the most directly comparable GAAP financial measures is included with the financial statements contained in this press release. Management uses both GAAP and non-GAAP information in evaluating and operating its business internally and as such has determined that it is important to provide this information to investors.

Investor and Media Contact:

Joo Mi Kim

Vice President, FP&A and Investor Relations

(650) 801-6100

ir@qualys.com

Source: Qualys


Qualys, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share data)

 

     Three Months Ended
December 31,
    Year Ended
December 31,
 
     2016     2015     2016     2015  

Revenues

   $ 52,224      $ 44,445      $ 197,925      $ 164,284   

Cost of revenues (1)

     11,677        9,002        42,473        33,885   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     40,547        35,443        155,452        130,399   

Operating expenses:

        

Research and development (1)

     8,885        7,532        35,267        29,451   

Sales and marketing (1)

     15,346        13,068        57,970        49,569   

General and administrative (1)

     7,505        7,147        32,108        26,573   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     31,736        27,747        125,345        105,593   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     8,811        7,696        30,107        24,806   

Other income (expense), net:

        

Interest expense

     (3     (2     (26     (6

Interest income

     417        184        1,320        570   

Other expense, net

     (530     (365     (972     (850
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other income (expense), net

     (116     (183     322        (286
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     8,695        7,513        30,429        24,520   

Provision for income taxes

     2,788        2,089        11,205        8,655   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 5,907      $ 5,424      $ 19,224      $ 15,865   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income per share:

        

Basic

   $ 0.17      $ 0.16      $ 0.55      $ 0.47   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.15      $ 0.14      $ 0.50      $ 0.42   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares used in computing net income per share:

        

Basic

     35,762        34,294        35,247        34,050   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     39,002        38,146        38,369        38,184   
  

 

 

   

 

 

   

 

 

   

 

 

 

(1)       Includes stock-based compensation as follows:

        

Cost of revenues

   $ 540      $ 245      $ 1,858      $ 1,250   

Research and development

     1,305        1,352        5,678        4,936   

Sales and marketing

     1,411        1,061        4,870        3,867   

General and administrative

     1,771        2,158        7,743        7,441   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total stock-based compensation

   $ 5,027      $ 4,816      $ 20,149      $ 17,494   
  

 

 

   

 

 

   

 

 

   

 

 

 


Qualys, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(in thousands)

 

     Three Months Ended
December 31,
    Year Ended
December 31,
 
     2016     2015     2016     2015  

Net income

   $ 5,907      $ 5,424      $ 19,224      $ 15,865   

Available-for-sale investments:

        

Change in net unrealized (loss) on investments, net of tax

     (168     (238     (57     (202

Less: reclassification adjustment for net realized gain (loss) included in net income, net of tax

     (5     (10     112        (19
  

 

 

   

 

 

   

 

 

   

 

 

 

Net change

     (173     (248     55        (221
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss), net

     (173     (248     55        (221
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income

   $ 5,734      $ 5,176      $ 19,279      $ 15,644   
  

 

 

   

 

 

   

 

 

   

 

 

 


Qualys, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands)

 

     December 31,  
     2016     2015  

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 86,737      $ 91,698   

Short-term investments

     157,119        87,268   

Accounts receivable, net

     47,024        42,325   

Prepaid expenses and other current assets

     9,808        7,945   
  

 

 

   

 

 

 

Total current assets

     300,688        229,236   

Long-term investments

     45,725        43,277   

Property and equipment, net

     39,401        31,329   

Deferred tax assets, net

     16,590        16,079   

Intangible assets, net

     987        1,360   

Goodwill

     317        317   

Restricted cash

     1,200        —     

Other noncurrent assets

     2,096        1,916   
  

 

 

   

 

 

 

Total assets

   $ 407,004      $ 323,514   
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current liabilities:

    

Accounts payable

   $ 2,051      $ 2,368   

Accrued liabilities

     13,317        11,786   

Deferred revenues, current

     114,964        98,025   
  

 

 

   

 

 

 

Total current liabilities

     130,332        112,179   

Deferred revenues, noncurrent

     15,528        14,564   

Other noncurrent liabilities

     2,731        1,205   
  

 

 

   

 

 

 

Total liabilities

     148,591        127,948   

Stockholders’ equity:

    

Common stock

     36        34   

Additional paid-in capital

     266,794        223,228   

Accumulated other comprehensive loss

     (156     (211

Accumulated deficit

     (8,261     (27,485
  

 

 

   

 

 

 

Total stockholders’ equity

     258,413        195,566   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 407,004      $ 323,514   
  

 

 

   

 

 

 


Qualys, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

 

     Year Ended December 31,  
     2016     2015  

Cash flows from operating activities:

    

Net income

   $ 19,224      $ 15,865   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization expense

     16,994        14,360   

Bad debt expense

     199        851   

Loss on disposal of property and equipment

     55        5   

Stock-based compensation

     20,149        17,494   

Amortization of premiums and accretion of discounts on investments

     1,000        594   

Excess tax benefits from stock-based compensation

     (8,700     (487

Impairment of intangible assets

     —          255   

Deferred income taxes

     (440     6,564   

Changes in operating assets and liabilities:

    

Accounts receivable

     (4,898     (10,183

Prepaid expenses and other assets

     (2,107     (1,011

Restricted cash

     (1,200     —     

Accounts payable

     (1,220     (3,293

Accrued liabilities

     9,696        3,339   

Deferred revenues

     17,903        21,378   

Other noncurrent liabilities

     1,455        229   
  

 

 

   

 

 

 

Net cash provided by operating activities

     68,110        65,960   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Purchases of investments

     (222,953     (146,707

Sales and maturities of investments

     149,708        105,509   

Purchases of property and equipment

     (23,245     (20,051

Capitalized software development costs

     —          (99
  

 

 

   

 

 

 

Net cash used in investing activities

     (96,490     (61,348
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Proceeds from exercise of stock options

     15,157        10,095   

Excess tax benefits from stock-based compensation

     8,700        487   

Payments for taxes related to employee net share settlement of equity awards

     (438     —     
  

 

 

   

 

 

 

Net cash provided by financing activities

     23,419        10,582   
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     —          —     

Net (decrease) increase in cash and cash equivalents

     (4,961     15,194   

Cash and cash equivalents at beginning of period

     91,698        76,504   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 86,737      $ 91,698   
  

 

 

   

 

 

 


Qualys, Inc.

RECONCILIATION OF NON-GAAP DISCLOSURES

EBITDA AND ADJUSTED EBITDA

(Unaudited)

(in thousands)

 

     Three Months Ended
December 31,
     Year Ended
December 31,
 
     2016      2015      2016     2015  

Net income

   $ 5,907       $ 5,424       $ 19,224      $ 15,865   

Depreciation and amortization of property and equipment

     4,586         3,843         16,621        13,974   

Amortization of intangible assets

     44         93         373        386   

Interest expense

     3         2         26        6   

Provision for income taxes

     2,788         2,089         11,205        8,655   
  

 

 

    

 

 

    

 

 

   

 

 

 

EBITDA

     13,328         11,451         47,449        38,886   

Stock-based compensation

     5,027         4,816         20,149        17,494   

Other (income) expense, net

     113         181         (348     280   

One-time tax related expense

     —           —           716        —     
  

 

 

    

 

 

    

 

 

   

 

 

 

Adjusted EBITDA

   $ 18,468       $ 16,448       $ 67,966      $ 56,660   
  

 

 

    

 

 

    

 

 

   

 

 

 


Qualys, Inc.

RECONCILIATION OF NON-GAAP DISCLOSURES

(Unaudited)

(in thousands, except per share data)

 

     Three Months Ended     Year Ended  
     December 31,     December 31,  
     2016     2015     2016     2015  

GAAP Cost of revenues

   $ 11,677      $ 9,002      $ 42,473      $ 33,885   

Less: Stock-based compensation

     (540     (245     (1,858     (1,250
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Cost of revenues

   $ 11,137      $ 8,757      $ 40,615      $ 32,635   
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Gross profit

   $ 40,547      $ 35,443      $ 155,452      $ 130,399   

Plus: Stock-based compensation

     540        245        1,858        1,250   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Gross profit

   $ 41,087      $ 35,688      $ 157,310      $ 131,649   
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Research and development

   $ 8,885      $ 7,532      $ 35,267      $ 29,451   

Less: Stock-based compensation

     (1,305     (1,352     (5,678     (4,936
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Research and development

   $ 7,580      $ 6,180      $ 29,589      $ 24,515   
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Sales and marketing

   $ 15,346      $ 13,068      $ 57,970      $ 49,569   

Less: Stock-based compensation

     (1,411     (1,061     (4,870     (3,867
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Sales and marketing

   $ 13,935      $ 12,007      $ 53,100      $ 45,702   
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP General and administrative

   $ 7,505      $ 7,147      $ 32,108      $ 26,573   

Less: Stock-based compensation

     (1,771     (2,158     (7,743     (7,441

Less: One-time tax related expense

     —          —          (716     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP General and administrative

   $ 5,734      $ 4,989      $ 23,649      $ 19,132   
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Operating expenses

   $ 31,736      $ 27,747      $ 125,345      $ 105,593   

Less: Stock-based compensation

   $ (4,487   $ (4,571   $ (18,291   $ (16,244

Less: One-time tax related expense

     —          —          (716     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Operating expenses

   $ 27,249      $ 23,176      $ 106,338      $ 89,349   
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Income from operations

   $ 8,811      $ 7,696      $ 30,107      $ 24,806   

Plus: Stock-based compensation

     5,027        4,816        20,149        17,494   

Plus: One-time tax related expense

     —          —          716        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Income from operations

   $ 13,838      $ 12,512      $ 50,972      $ 42,300   
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Net income

   $ 5,907      $ 5,424      $ 19,224      $ 15,865   

Plus: Stock-based compensation

     5,027        4,816        20,149        17,494   

Plus: One-time tax related expense

     —          —          716        —     

Less: Tax adjustment

     (2,152     (2,399     (7,261     (6,638
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net income

   $ 8,782      $ 7,841      $ 32,828      $ 26,721   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net income per share:

        

Basic

   $ 0.25      $ 0.23      $ 0.93      $ 0.78   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.23      $ 0.21      $ 0.86      $ 0.70   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares used in computing non-GAAP net income per share:

        

Basic

     35,762        34,294        35,247        34,050   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     39,002        38,146        38,369        38,184   
  

 

 

   

 

 

   

 

 

   

 

 

 


Qualys, Inc.

RECONCILIATON OF NON-GAAP DISCLOSURES

FREE CASH FLOWS

(Unaudited)

(in thousands)

 

     Year Ended December 31,  
     2016     2015  

GAAP Cash flows provided by operating activities

   $ 68,110      $ 65,960   

Less:

    

Purchases of property and equipment

     (23,245     (20,051

Capitalized software development costs

     —          (99
  

 

 

   

 

 

 

Non-GAAP Free cash flows

   $ 44,865      $ 45,810   
  

 

 

   

 

 

 


Qualys, Inc.

RECONCILIATON OF U.S. GAAP REVENUE GROWTH AND CURRENT DEFERRED REVENUE GROWTH TO NON-GAAP NORMALIZED GROWTH

(Unaudited)

(in thousands)

Reconciliation of U.S. GAAP Revenue Growth to Non-GAAP Normalized Growth

 

     Three Months Ended     Year Ended  
     December 31, 2016     December 31, 2016  

Revenues

   $ 52,224      $ 197,925   

Y/Y Revenue Change as reported under U.S. GAAP

     17.5     20.5

Less: Estimated Impact of MSSP Contract Signed in Feb 2016

     0.8     2.0

Less: Estimated Foreign Exchange Impact

     (1.2 )%      (1.6 )% 
  

 

 

   

 

 

 

Estimated Normalized Revenue Growth

     17.9     20.2
  

 

 

   

 

 

 

 

     Three Months Ended March 31,
2017
    Year Ended December 31, 2017  

Revenue Guidance Range

   $ 52,000      $ 53,000      $ 224,000      $ 228,000   

Y/Y Revenue Change as Reported Under U.S. GAAP

     12.4     14.6     13.2     15.2

Less: Estimated Impact of MSSP Contract Signed in Feb 2016

     (2.1 )%      (2.2 )%      (1.5 )%      (1.6 )% 

Less: Estimated Foreign Exchange Impact

     (1.1 )%      (1.1 )%      (1.5 )%      (1.5 )% 
  

 

 

   

 

 

   

 

 

   

 

 

 

Estimated Normalized Revenue Growth

     15.6     17.9     16.2     18.3
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of U.S. GAAP Current Deferred Revenue Growth to Non-GAAP Normalized Growth

 

     Year Ended  
     December 31, 2016  

Current Deferred Revenue

   $ 114,964   

Y/Y Current Deferred Revenue Change as reported under U.S. GAAP

     17.3

Less: Estimated Impact of MSSP Contract Signed in Feb 2016

     (4.2 )% 

Less: Estimated Foreign Exchange Impact

     (1.2 )% 
  

 

 

 

Estimated Normalized Current Deferred Revenue Growth

     22.6